Business Rundown: Investor Optimism Pushes Markets To Historic Highs
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Friday, June 27th, 2025. The S&P 500 and the Nasdaq hit new record highs on Friday, riding investor enthusiasm from a renewed calm in the Middle East.

positive trade deal progress, and a potential rate cut in our future. So it just seems like deals are progressing. As I like to say, the world doesn't end very often, Taylor. So, you know, I think bottom line is that the market's really been kind of a nonstop move upward. Shortly after the opening bell this morning, the S&P 500 and Nasdaq hit new records. They had been climbing on Thursday as well, as investors felt the optimism of more stability in the Middle East

all as the Israel-Iran ceasefire agreement negotiated by President Trump appears to be holding so far. Another green flag for investors this week was reports of movement on trade deals with both China and the European Union, like on Thursday night when the president announced a rare earth exporting deal with China.

The EU leaders met at a summit to discuss the U.S. trade proposal ahead of Trump's July 9th deadline. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Besson have told media the U.S. is nearing deals with other nations as well. Besson told Fox Business, I think we can have trade wrapped up by Labor Day. And President Trump has not been shy in urging Fed Chair Jerome Powell to cut interest rates.

With May PCE data showing inflation ticking up slightly, some investors are pricing in, could it be, a better chance of a rate cut in July. All right, Ryan, you know, I always love having you, but I really love having you when we're at records. I think the S&P 500 and the NASDAQ at a record, the S&P on pace for its fourth record this year. And I think you'll correct me if I'm wrong, the NASDAQ may hit its first record of

Again, assuming that we close at these levels at 4 p.m. and a lot can happen throughout the day. But again, so far around midday on Friday, there is some optimism. And I'm curious from your perspective, what's the most optimistic thing that you've seen?

What's driving the optimism? The biggest catalyst this year on the downside, more so than the upside, were the tariffs. And that really put the market into a tizzy, to say the least. We're down almost 20% on the S&P 500. NASDAQ was down even more.

And I think what you're seeing now is the market's getting past it. Ryan Payne is president at Payne Capital Management, and I'm so excited he's joining us now. Right. It looks like whatever the severity of those tariffs was initially going to be, it's not going to be that bad. And it looks like the negotiations are going to continue. Right. So we thought we had this 90 day deadline. And now it's apparently Scott Besson saying, well, we may have the Labor Day and we may have actually struck a deal with China for some of their rare earth magnets.

So it just seems like deals are progressing. As I like to say, the world doesn't end very often, Taylor. Just a few times. Yeah. So I think bottom line is that the market's been pricing it really since April, really. The market bottomed in April. It's really been an upward trajectory since then. Totally.

Yeah. So and it's really been a kind of a nonstop move upward. So I think once you get past tariff turmoil, we'll call it, you know, one thing that's been consistent the whole year, one thing I put out the whole year is the economy is actually in pretty good shape. Right.

So I want to talk about the economy and some of the PCE numbers first, but you mentioned tariffs. Are you worried that this deal with China is no more than what we got in Geneva a few weeks ago? Is that a disappointment or is that just like, you know what, that's okay. It shows that we're still in communications. We have a framework agreement, even though it's nothing revolutionary. It shows that two sides are at least talking and that tensions aren't escalating from there.

yeah i think it's definitely the latter right it's all relativity at one point china and the us were just ratcheting up tariffs you know one after the other um and now it's kind of the the cool down or the come down where we're actually looking to make a real deal and a real framework and a lot of this for us is around these rare earth minerals which china is the largest exporter in the world something's critical to our technology sector

And on the flip side, China does want some of our technology for their own technology industry. So I think we're at a point now where cooler heads have prevailed and a real framework is being built. And markets are great. Forecasting mechanism is a great forecast. Forecasting mechanism.

And I think that's really what the market's been telling you now for a couple of months is we are getting past this. Deals are going to get done, especially with China, which has always been the, I guess, really the big wild card. And, you know, so from that perspective, things look pretty good. We are getting...

Some headlines as well. It looks like the European Union is coming out with the U.S. and saying that they're confident they can get a deal done by that July 9 deadline. So perhaps that helps fuel the optimism as well, though the EU has been tough because there's 27 nations and Germany wants something different than what Italy wants. So again, how important is that for the EU to meet that July 9 deadline, assuming they do?

Well, you know, assuming that, you know, Scott Beston said that they that they will wrap this up by Labor Day as a hint that we're not going to stick to that deadline. OK, but I think realistically, it does sound like by the summertime, everything is getting hashed out with these different countries. And I mean, truth be told, the Trump administration has moved very quickly. Right. A lot of people thought it was impossible.

that the Trump administration was going to be able to make these deals with all these different countries in a very short period of time. So maybe it's not the first deadline, but it does apparently look like they're going to get done before the end of the year and actually before the end of the summer. I think that's realistic. And it sounds like we are down the homestretch with a lot of these deals. So they should probably start getting announced sometime during the summer, which could be just another catalyst to push markets even higher. OK, let's talk about the economy then, because

You know, on one hand, we had the University of Michigan sentiment numbers. That's sort of the soft data. The good news about that is it shows that, you know, as a consumer, my one year ahead and five year ahead inflation expectations are drastically falling. But then we also got PCE. And for our audience, that's the Fed's preferred measure of inflation. They don't always look at CPI and PPI. They really like core PCE.

Those numbers to me were mixed. I mean, I keep reading headlines that super scary, right? Oh, my gosh, this is a lot of stag and a lot of flation and tariffs are finally starting to show up in the data. What is your read on balancing?

Some data this morning that showed that inflation is starting to maybe pick up one tenth of one percent. But an economy that is is pretty good, as you mentioned. How are you weighing those? Yeah, well, don't be scared, Taylor. I think that's for every darn note I read panics me. So give us some calm.

Yeah, look, I mean, it's a small uptick, a little bit more than expected. In fact, PCE was expected to go up a little bit, I think 2.6%, I want 2.7%. So we're kind of splitting hairs. That data is very stale now as well. You know, that's May data, we're almost in July. Okay. And I think overall, if you look at the big picture is inflation has cooled significantly, right over the last two years. And meanwhile, if you look at wages, real wages, meaning growing over inflation, you

you have a pretty big spread there. And when Americans are making money over inflation in those sentiment indicators, they're not great indicators because I always say if Americans feel good or they feel bad, they spend money. Right. So, in fact, when they feel bad, they probably spend more money. Maybe on alcohol and cigarettes. Yeah, alcohol and cigarettes, things we love here in America. But no, but I think the important point here is when Americans are making, you know,

you know, real earnings over inflation, what they do is they tend to spend. And I think that's what you're going to see here. Now, you know, retail sales came in a little weaker this past month. I would imagine the savings rate actually went up a little bit, which means that money did get saved. But I think overall, it's a good bet here to say that, you know, consumption is going to be strong this year. You know, people have money to spend, they're going to spend it. And unless we see some, you

huge uptick in inflation. Now, I think inflation could come up maybe a little bit here. I don't think that's a huge, huge concern. And I think that's what the stock market's telling you right now. The spirit of innovation is deeply ingrained in America, and Google is helping Americans innovate in ways both big and small.

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Crack down on the middlemen. End the free writing. Lower drug prices. Go to balance the scales dot org to learn more. Paid for by pharma. You've also had three members of the Federal Reserve come out in the last seven days and hint that they are more open to a July cut than we thought.

Originally, a lot of the consensus was September and December. You had Chris Waller, Mickey Bowman, Austin Goolsbee all in the last week say, OK, maybe July because...

Surprise, surprise. None of the tariff inflation is actually showing up. We don't see it as much as we thought. Does that also help juice the markets, knowing that, you know, the Fed is tilted more towards boosting the labor market and taking its foot off the gas when it comes to all of their concerns about inflation as they balance those two competing issues?

Yeah, I think what you saw from the Fed is a more dovish tone in general. I think Austin Goolsbee might be vying for the job of Fed chairman. So he wants to be on the side of Donald Trump. But that's just my my opinion. I think Jay Powell did make it clear that they probably will cut rates maybe twice this year.

And I think that's realistic. You know, if you look at again, we have full employment. Inflation is moderated. It's under control. So the question is, is there really a reason not to cut rates? Now, I get it. We don't really know the full impact of tariffs. You know, that's very reasonable. We have this in the Middle East right now. We have a conflict there. It looks like it may be settled, but oil prices have been all over the place over the last week. And we know when oil goes up, that's extremely inflationary for the global economy.

So, you know, I guess for if you're Jay Powell right now, the Fed chairman, it probably does make sense to stay pat, see what happens. But at some point here, if we don't really see the needle being moved on inflation or we don't see an uptick in unemployment, then I think he is going to be forced to cut. I think that's what the market's telling you. If you look at shorter term rates, they've been slowly coming down and longer term rates have pretty much been anchored.

So, you know, you can have a, you know, a steeper yield curve. And I think markets are starting to anticipate that there will be some Fed cuts here sometime this year. So let's talk a little bit more about markets, because I read a note this morning that

Oh, my gosh. NVIDIA is on its way to a $4 trillion market cap. Someone yesterday told me $6 trillion is the next deal, right? I think yesterday we were at like a $3.8, $3.9 trillion. You continue to see record highs. They're now more valuable than Microsoft, though Microsoft's also at a record high. It's pretty incredible. If I'm nervous about investing at record highs, I always try to tell people,

You'll never catch the bottom. Just dollar cost average. Just get in. Because if I wait for the bottom, I've missed the rally in the last month. But I know it can be really difficult for people to look at NVIDIA at $155 a share, Microsoft at $500 a share and say, OK, I'm going to get in, even though I might think that this is the top. What do you tell people?

Yeah, and I get you feel like you're between a rock and a hard place right now, right? Markets moved a lot if you thought that, well, maybe the world was going to end. I should sit in cash. I think bottom line is, look, if you look at the Magnificent Seven, stocks like Nvidia, Microsoft,

uh they aren't cheap right i mean if you look at the magnificent seven as a whole it trades at 30 times forward earnings which is kind of like wall street speak but aka you know they trade relatively expensive right they do have high growth rates um but those stocks have moved magnificently uh over the course last couple years good pun yeah you know what i'm on today i'm on fire today because i'm talking to you taylor um so i think the bottom line there is

look you're probably in the later innings of that trade and i do i think they go higher here i do there's a lot of cash on the sidelines that's going to get in this market but i think the good news is is most markets are actually relatively cheap if you look at the international markets which believe it or not who would have guessed beginning of the year when we're talking about american exceptionalism are dramatically outperforming u.s markets this year germany's up 30 this year

And it still trades extremely cheap. Small cap stocks, which haven't really recovered this year, they're not their all time record highs. They trade relatively cheap here too. And they're tethered to the economy more so than...

than a multinational corporation, like a big cap name, like any of the magnificent seven names. So if we think the economy is going to do well this year, which we know I do, I've said it, that's going to bode well for a lot of different segments of the market. And in fact, this year, when you look at a sector basis, it's not technology that's leading in the US, it's industrials, it's financials. It's a lot of those more boring old school industries. And if you look at their multiples, they're still trading relatively reasonable and they're

you're getting some great dividends. Like a lot of my clients are baby boomers. So you're able to generate a lot of cash flow by diversifying away from the Magnificent Seven, which pays very little in cash flow, which isn't helpful if you're a retiree.

And again, I think, you know, you're probably getting a point here that is long in the tooth, could go higher here, but your long-term prospects probably aren't as good there. And I'd say that's where most investors are making the mistake is they're not spreading their money out. And this year, it's definitely been a win to be more diversified. Having a global portfolio has dramatically outperformed just the stay-at-home trade.

That totally makes sense. Two minutes left. What are your final thoughts? Go anywhere you want. You mentioned oil. I mean, we could go there. I don't know the last time we had a Middle East conflict break out. We...

bombed three nuclear sites and oil falls from 80 to 65 a barrel. That's shocking to me. That's massively deflationary for the consumer if you stay at these levels. But in the last sort of minute or two, what's your final key takeaway as we head into the weekend?

Yeah, I think you just hit the nail on the head, right? When oil prices go down, I call that like a stealth stimulus, right? That's a huge stimulant for the global economy, not just here in the US, whether you're a consumer who needs to drive places, whether you're a business where you're transporting your goods, running your factory, that's a big offset. We're in this huge revolution right now, productivity. It's not really about buying the quote unquote AI trade. It's like every company benefits from artificial intelligence, robotics,

automation, depending on your industry. There's not anyone I've talked to that isn't able to cut their bottom line down because now they're using this new technology. Did you see Salesforce yesterday said 30 to 50% of the work is now done by AI?

That's insane. That's insane. Now, I mean, it might mean fewer employees, but that means that if I am an employee, I'm now freed up to be way more productive elsewhere because I'm not sitting there trying to figure out how to do something that I can do in 10 seconds. 30 percent of my job. That is incredible.

And that's incredible. And actually, we have a labor shortage in this country with all the baby boomers retiring. So we're actually going to need AI just to help us keep the workforce moving. So that means probably higher wages, more productivity. Marges are going up, which is going to be a huge offset against any tariffs. Man, I think we're just hitting the nail on the head here. And that stat just blew me away. I didn't know that stat, Taylor. I'll send you that story. It's a great one.

Yeah, I know. That's why I roll with you. So I think that that's a lot of reasons to be extremely optimistic here. I'd be extremely bullish. But again, I think the emphasis on diversification

Every country, every company is going to benefit from all these new trends, from productivity gains, from artificial intelligence. So spread your money out. You'll thank me later. Ryan Payne, we thank you now because you're getting us closer to 4 p.m. on a Friday. Really appreciate your time and we'll talk to you soon. Have a great weekend, Taylor. Thank you.

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